DairyBusiness Update for June 12, 2013

Members of Cooperatives Working Together (CWT) endorsed a larger investment in the farmer-funded self-help program, voting to enhance the membership requirement from 2¢/cwt. to 4¢/cwt., effective July 1, 2013, and running through Dec. 31, 2015.

The additional investment will cover the large increase in CWT member requests for export assistance in 2013, driven by increased demand in world dairy markets for U.S. American-type cheeses, butter, whole milk powder, and anhydrous milkfat.

Since the start of 2011, the CWT Export Assistance program has helped member cooperatives sell 257.7 million lbs. of American-type cheeses and 111.5 million lbs. of butter to 39 countries on six continents.

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released June 12, kept projected 2013 milk production estimates steady from a month earlier, but lowered 2014 production estimates about 100 million lbs. Relatively weak milk-to-feed price ratios in the third and fourth quarter of 2013 are expected to slow production growth in the first half of 2014

• 2013 production and marketings were projected at 201.8 billion lbs. and 200.8 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.7% from 2012.

• 2014 production and marketings were projected at 204.5 billion lbs. and 203.6 billion lbs., respectively. If realized, 2014 production and marketings would be up about 1.3% from 2013.

As a result of a lower cheese price forecast, the 2013 Class III price outlook was reduced to a range of $17.80-$18.20/cwt.; the Class IV price is $18.15-$18.65/cwt., as lower butter prices more than offset higher nonfat dry milk prices. The all-milk price was forecast at $19.60 to $20.00/cwt.

For 2014, the butter price forecast is lowered as stocks remain high, but other product prices were unchanged. The Class III price forecast is $17.00-$18.00/cwt.; the Class IV price is forecast at $17.75-$18.85/cwt.; the all-milk price is projected between $18.95-$19.95/cwt.

Impacting cull cow prices, USDA’s World Ag Supply & Demand Estimates (WASDE) reportestimated 2013 beef production up from last month, as poor forage conditions have resulted in relatively large placements of cattle in feedlots in the first part of 2013, and cow slaughter remains high. Forecasts for 2013 beef exports were reduced, as trade to a number of markets has been relatively weak. Cattle price forecasts for 2013 were lowered $1/cwt. from last month, reflecting lower-than-expected prices to date. The 2013 steer price was estimated in a range of $125-$130/cwt.; the 2014 forecast is in a range of $128-$138/cwt.

On the cost side of the dairy equation, the outlook for 2013/14 U.S. feed grain supplies was lowered this month, as delayed plantings reduce yield prospects for corn. Projected corn production is lowered 135 million bushels to 14.0 billion with the average yield projected at 156.5 bushels per acre, down 1.5 bushels from last month. The 2013/14 season-average farm price for corn was projected at $4.40-$5.20/bushel, up 10¢ on each end of the range, but down sharply from the record $6.75-$7.15/bushel average for 2012/13.

U.S. soybean supply and use projections for 2013/14 were unchanged from last month. The U.S. season-average soybean price for 2013/14 is forecast at $9.75-$11.75/bushel, up 25¢ on each end of the range, but down from $14.35/bushel in 2012/13. Soybean meal is forecast at $290-$330/ton in 2013/14, up $10 on each end. It compares to $450/ton in 2012/13.

Look for cottonseed supplies to shrink, and prices to rise. The 2013/14 U.S. cotton supply and demand balance sheet shows lower beginning and ending stocks, lower production, increased exports and higher prices relative to last month.

The National Milk Producers Federation (NMPF) announced Jim Mulhern will take over as president and chief executive officer on Jan. 1, 2014, succeeding Jerry Kozak, who has held the position since 1997. Earlier this year, Kozak informed the NMPF board of his desire to retire on Dec. 31, 2013.

A Wisconsin native, Mulhern currently serves as NMPF chief operating officer (COO). He rejoined NMPF in January 2013, and since that time has managed the communications, government relations and membership functions of the organization.

After his retirement, Kozak will continue his involvement with the organization’s Cooperatives Working Together (CWT) program, which provides export assistance to its member cooperatives. He will oversee CWT’s program and administrative operations and will report directly to Mulhern.

Researchers at the University of Arkansas are attempting to help the U.S. dairy industry decrease its carbon footprint. Research team leader Greg Thoma, professor of chemical engineering looked at all facets and stages of milk production. The researchers found every kilogram of milk consumed in the United States per year, 2.05 kilograms of greenhouse gases, on average, are emitted over the entire supply chain to produce, process and distribute that milk. This is equivalent to approximately 17.4 lbs. per gallon. Their study was published as a special issue, “Carbon and Water Footprint of U.S. Milk, From Farm to Table,” of the International Dairy Journal in April.

On the farm, the researchers suggested widespread nutrient management strategies, recommending dry lot and solid storage systems as preferred management strategies, rather than anaerobic lagoons and deep bedding. Methane digesters should be a high priority.

At the processor and distribution level, greater emphasis on truck fleet-fuel usage and consumption of electricity will reduce emissions. Energy-efficiency practices focused on refrigeration and compressed-air systems, motors and lighting will also lead to reduction.

Finally, the researchers recommended a careful examination of trucking transport distances to realize greater optimization and efficiency of routes. They also suggested transport refrigeration systems that use fewer refrigerants.

Penn State University’s measure of income over feed costs (IOFC) rose 2.5% in May, halting a string of five monthly declines, according to economist Jim Dunn. At $7.40/cwt./cow/day, the May IOFC is down $1.70/cwt. from the November 2012 peak of $9.10/cow/day.

The May Pennsylvania all-milk price was up 20¢/cwt. from April’s revised estimate, to $21.00/cwt. That results in daily milk income from a cow producing 65 lbs. of milk per day at $13.65. The cost to feed the same cow dropped 5¢ (0.75%) per day, to $6.25/day. The price of alfalfa hay (-6%) offset small increases in soybean meal and corn prices.

Measured another way, feed costs per hundredweight of milk produced averaged $9.62/cwt., down 7¢ from April’s revised estimate. With the slightly highher milk price, the milk margin over feed costs was $11.38/cwt., up 27¢ from April.

Tony Mattos, a Dairyman in Hanford, Calif., will be featured in the July 2013 issue of DairyBusiness West. Take a look at this video to meet Tony and learn a little about his dairy and management style.

It is with heavy hearts that we share the passing of Andrea Crowe of Hi-Calibre Holsteins, Nova Scotia. Andrea touched everyone she came in contact with, and her love and passion for the Holstein cow was second to none. An official obituary will be posted as soon as it is available.